Retiring in My Late 50s – Looking for Feedback on My Plan

[Koolau]

BFF got a chance to take a package from our Megacorp (I was too young). He was afraid TO take it but also afraid NOT to take it. He talked it over with his wife and she agreed to keep w*rking because that's the only way they could make it if he left early. So, less than a year later, his wife simply quite w*rk. She didn't retire, she just quit, so no retirement benefits and no income from her j*b. She saw how much fun retirement was for him and got jealous.

So, he had to go find w*rk. He got some menial gigs (cutting down trees, painting houses, etc.) then drove school bus which was decent pay for the time, but it meant all his (school) days were more or less taken.

Point being? If DW isn't REALLY on board, then you could face some issues you hadn't planned for. Be sure you know what your DW wants.

 

[pacergal]

If you "historically have spent more" than $72,000, but that is your retirement budget, definitely need to spend a year or two in that practice budgeted amount before you leave your full time job.

I would not want to retire with the numbers as close as they are. You still have two kids at home, are you paying for college or other training? weddings? etc.

 

[Aerides]

Point being? If DW isn't REALLY on board, then you could face some issues you hadn't planned for. Be sure you know what your DW wants.

And she may very honestly want to keep working, today. But tying her hands and requiring her to for X years after the OP retires can/may create issues. Coming home every day and seeing your partner carefree and relaxed, or out enjoying their hobbies, and one does start to think...hmm....3 years in she decides she'd like to retire too "but honey we agreed" doesn't work very well.

I know myself well enough to know that DH and I would retire at the same time or very close or I would not be happy.

 

[Koolau]

And she may very honestly want to keep working, today. But tying her hands and requiring her to for X years after the OP retires can/may create issues. Coming home every day and seeing your partner carefree and relaxed, or out enjoying their hobbies, and one does start to think...hmm....3 years in she decides she'd like to retire too "but honey we agreed" doesn't work very well.

I know myself well enough to know that DH and I would retire at the same time or very close or I would not be happy.

Heh, heh, DW solved the "inequality of retirement." She retired FIRST! She played for several years before I joined HER.

 

[Slim11]

And dont forget If in a state like NY, they will tax your 401k ( unless its a roth) also..

 

[Doolish1]

2 thoughts. FIRECALC it but I don't see how 1M is enough in this plan, especially with children involved.

"Pension buy out and roll over". I would test that one out because if it's about waiting it out to get the deferred pension later.... this usually wins the math.

I agree with Aeridies as people usually retire on the same general timeline to avoid these issues.

 

[swakyaby]

@ corvt863
Does your username mean you are a corvette fan? I had a 1999 C5 sports coupe, a beautiful car in light pewter.

 

[G POP]

What happens if your wife decides she doesn’t want to work? Loses her job? Has a major medical event and can’t work for a time? Or is totally disabled? Dies? My sister became totally disabled at 47, needed expensive care and died at 51. Hopefully none of the above happen

Every single one of us deals with “what ifs”. No one has the perfect plan for EVERY contingency.

 

[dobig]

They lucked out because we both swapped homes, i.e. sold existing home to buy another home, at the same time and they picked a community that the prices have really taken off. They paid $1.15M, and got a $350K mortgage in Jan 2021. Currently their home can be sold for about $2M, and their plan is to sell it and use some of the cash to live on, and buy a different home in another community. Their issue is that they like nice things, so it will be a step down in the home that they buy. He golfs and wants a golf community, i.e. private country club like where they currently belong to and be able to drive his golf cart from their home to the clubhouse. There are really not many good options for $700K to $1M range in their area, and definitely not where they currently live. They are still contemplating but they are down to their last half a million dollars now. They retired in 2017.

It's really hard to feel bad for people like this. How frustrating it must be for you to be their friend.

 

[dobig]

With 2 kids still at home I don't see how $1 million could possibly work. Even in a year or two when you can access retirements accounts it seems like it would be pretty tight with not many options for contingencies. You might be able to model a portfolio that would pay you around 5% in dividends and distributions which at your full $1.7 million could give you around $85,000/year but you would need to be real careful about your investments and not get carried away with high yield. And if I went this route I'd make sure to have at least a $50k emergency fund.

 

[pb4uski]

And dont forget If in a state like NY, they will tax your 401k ( unless its a roth) also..

No need to single out NY. There are 14 states that tax qualified traditional 401k or traditional IRA withdrawals... that's 1/3 of the 42 of the 51 jurisdictions (50 states and DC) that have a income tax.

 

[RetiredHappy]

With 2 kids still at home I don't see how $1 million could possibly work. Even in a year or two when you can access retirements accounts it seems like it would be pretty tight with not many options for contingencies. You might be able to model a portfolio that would pay you around 5% in dividends and distributions which at your full $1.7 million could give you around $85,000/year but you would need to be real careful about your investments and not get carried away with high yield. And if I went this route I'd make sure to have at least a $50k emergency fund.

$1.07m, not $1.7m, hence the problem.

 

[piccolopat]

I would wait. Try living on that 72k for 2 years, including a set aside for ACA premiums, before you pull the plug. Don't forget unexpected expenses. Since I retired, our electric bill has doubled, we've had to help support family temporarily and now had to replace 2 central air systems within a month for almost 28k. Make sure your planned budget includes for things like that and is as detailed as possible. Maybe negotiate some extra, unpaid vacation time or a 4 day work week.

 

[orbops]

In regards to the ACA possible monthly premiums, here is a good site that will give you an estimate. I use it every year before open enrollment. Another thing, when you look at specific plans, you need to assume the worst case and that you may have to pay up to the max out of pocket limit, not just your premiums. I retired early at 50, and had a surprise quadruple bypass at 57 - which meant I hit my max out of pocket immediately when I selected an HDHP plan that year.

Health Insurance Marketplace Calculator | KFF

The Health Insurance Marketplace Calculator, updated with 2025 premium data, provides estimates of health insurance premiums and subsidies for people purchasing insurance on their own in health insurance exchanges (or “Marketplaces”) created by the Affordable Care Act (ACA).

www.kff.org

 

[Bdarr]

Here is a few thoughts, 1. Understand RMD's. When you hit the required distribution age this a push you in to taking money you may not need and the penalty is higher taxes and IRMMA. 2. are you sure cash out a pension is wise? if you know your expected life expectancy based on your health, history of family health (the genetics risk), you have guaranteed income to add to Social Security and if the pension has a spousal benefit that is basically life insurance for the spouse. Pushing more money into a IRA it will effect IRRMA, RMD's and taxes. So in my opinion if you cash out your pension, start immediately doing Roth conversions filling up your tax bracket to reduce the effects of RMD's that can cause IRMMA to force you to pay more for medicare. 3. if you have 70k in cash, in a bank paying nothing, put it into 1-3 month treasuries to keep up with inflation.
From there what you do with your life is yours to decide.

 

[Koolau]

Here is a few thoughts, 1. Understand RMD's. When you hit the required distribution age this a push you in to taking money you may not need and the penalty is higher taxes and IRMMA. 2. are you sure cash out a pension is wise? if you know your expected life expectancy based on your health, history of family health (the genetics risk), you have guaranteed income to add to Social Security and if the pension has a spousal benefit that is basically life insurance for the spouse. Pushing more money into a IRA it will effect IRRMA, RMD's and taxes. So in my opinion if you cash out your pension, start immediately doing Roth conversions filling up your tax bracket to reduce the effects of RMD's that can cause IRMMA to force you to pay more for medicare. 3. if you have 70k in cash, in a bank paying nothing, put it into 1-3 month treasuries to keep up with inflation.
From there what you do with your life is yours to decide.

Most of what I've seen about pension cash-outs favors keeping the pension. You gotta do your due-diligence on this one. It's potentially a really big decision that needs careful study and a bit of luck to figure out.

 

[lauradrops]

And dont forget If in a state like NY, they will tax your 401k ( unless its a roth) also..

The first 20k of 401k withdrawels in NY are not taxed as long as you are 59 1/2 or older.